You correctly point out that HP will be in chaos for several months if the
merger is rejected.  But, it is more important to understand that HP will
be permanently damaged, if not ruined, if the merger does go through!

The fact that HP has been solely focused on a successful merger, without
regard for any other possible outcome, is the result of poor management and
lack of vision at the top.  This is called a gamble, not management.
Management has a fiduciary responsibility to plan for alternatives.
Rational investment in companies is not made to gamble, but to capitialize
on the experience of seasoned management and the corporate assets they can
apply to the marketplace for a profit.  A strong and compelling reason to
see this merger rejected is to prevent a gambling mentality management from
doing greater harm to the merged company than the merger rejection itself
would cause in a stand alone HP.

Remember, if the merger is approved HP management will then be diluted with
the management from Compaq that brought it the point of needing rescue.
Compaq management has a proven track record of failed mergers and will only
bring more poor thinking to HP.

Although HP will have problems after a rejected merger, it will also have
an otherwise rare opportunity to clean house in both the CEO's office and
on the Board of Directors.  HP needs fresh reasoned thinking by people that
understand the company and the industry.  It is obvious that those
presently calling the shots are out of gas and out of ideas.

So, reluctantly going along with this merger because management failed to
plan for the alternative is not a good reason to support it.  Indeed, it is
a solid reason to reject it!

Yesterday (bless their soles) HP released their estimate of what the first
quarter results of a combined HP-Compaq would have been had they been
merged.  Estimated merged results: 16 cents per share.  Actual unmerged
results: 25 cents per share.  You couldn't say it any better.

John R. Wolff
Vice President/CIO
LAACO, Ltd.

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